Enterprise Resource Planning (ERP) systems have been around since the 1960s, undergoing refinement be it around technology or processes with each iteration. Like accounting principles, the finance module of ERP systems has largely remained unchanged over the years in terms of its core purpose – to gather financial data and generate reports including ledgers, trial balance, balance sheets and financial reports.
Most of the micro-changes are to do with improving the efficiency and accuracy of data collection. In the digital economy, this includes greater use of application user interfaces (APIs) to allow for the secure exchange of data with other business applications such as analytic and robotic process automation (RPA) tools.
At multiple FutureCFO forums in Singapore, Malaysia, the Philippines and Indonesia, senior finance executives affirm the use of ERP systems as part of the core finance function. However, nearly all acknowledged the continued use of spreadsheets to facilitate financial analysis and planning at the functional level.
For many, the decision to continue the use of spreadsheets comes down to the ability to manipulate the data in ways more aligned to how the function performed tasks – a process that is at times unique to the organisation.
However, as pressure mounts to provide analysis in addition to just data points, finance may be forced to look beyond worksheets and analytical tools to help improve the efficiency of financial reporting. Automation is a clear direction for finance teams.
As the group chief information officer (CIO) at Tricor, Peter H. Lam conceded: “I still look at ERP system (enterprise resource planning) as ways to store the information databank into my business. However, to make it operational or automated, we do need to have the extraction of data within the ERP system and to have it [available] for FP&A and other financial planning exercises.”
The Asia-Pacific financial controller for the global insurer, AON, expressed his personal view that spreadsheets will continue to co-exist with other reporting tools for the finance team.
“It’s so deeply entrenched you just cannot rip it out from the finance function,” he quipped. He noted that Excel’s use is very personalised within the finance function, allowing for small quick analysis, piecing data together and presenting it out in a very quick way. Use of Excel according to me will continue at least for a very long period of time,” he concluded.
Tricor’s Lam admits that the use of spreadsheets comes with its own challenges. For a multinational like Tricor, there is the additional task of acquiring the spreadsheets from different countries and piecing it together.
“With automation, the plan forward, of course, we will still populate a certain spreadsheet; at the same time, we will use the robots to actually make automation happen so that in the end of the day, our FP&A will receive all the inputs to become the dashboard for the FP&A team and CFO as well,” Lam added.
He clarified that even with the availability of automation tools, use of spreadsheets will continue.
“I think where the automation sits is how the data is being extracted from one spreadsheet into systems or from one spreadsheet onto another spreadsheet. Automation supplements the original finance function,” he concluded.
Management consultant McKinsey predicts that automation will reshape the finance function. Knowing what to automate and manage the disruption can lead to a new era of productivity and performance.
At the rate that technology is evolving the wait might not be too long.
Spreadsheets have been around since 1969. Perhaps it is time to make way for new technology after all we’ve not seen a sci-fi movie that extols the benefits of spreadsheets.
But then again, mainframe computing has been around since the 1950s, and they are still around despite predictions to the contrary.